Chicago PMI

Chicago PMIChicago PMI is a composite index of business conditions in the Chicago area. Data from Chicagoland firms is collected by the financial news firm, Market News International, through manufacturing and non-manufacturing surveys sent to businesses. A drop in demand for goods is reflected in businesses’ responses in the Chicago PMI survey, which, is in turn, reflected in a lower index reading. Readings above 50 indicate an expanding business environment, while readings below 50 indicate a contractionary environment.  

In May, the Chicago PMI surged by 4.3% to a reading of 75.2—the highest since 1973. This month’s reading outperformed its forecast by 6.2 points. The index has increased by 42.9 points over the past twelve months, highlighting the extent of the economic recovery that has taken place since the pandemic-related recession was at its peak. 

Economic activity in the Chicago area improved over the past month, with strong demand boosting business activity. However, supply chain constraints remain a challenge for businesses. New orders rose in May, with the corresponding index rising to its highest level since 1983. Supplier deliveries rose to a 47-year high, but the bottlenecks continued to show up n the sub-index that measures order backlogs, which hit a 70-year high. As a result of the ongoing labor shortage, the employment sub-index slipped back into contraction territory and is down 6.5 points for the month. While the survey results point to strong economic growth, it might be localized since the Chicago PMI is particularly sensitive to orders for Boeing aircraft, which have increased in the past few months. Next week’s ISM reports will signal whether the expansion can be seen nationwide or if the economic recovery is beginning to stall. 

Chicago PMI

May 28, 2021